Coor retirement deal called costly to ASU

By Pat Flannery

The Arizona Republic

Nov. 26, 2002

Special report Support slipping for state universities

Though the state budget is bleeding red ink and Arizona's universities are battling a financial crisis, the Board of Regents this summer approved a unique and generous departure package for former Arizona State University President Lattie Coor, details of which are now coming to light.

The terms negotiated by Coor before he stepped down as president in June include:

A one-year sabbatical that began in July, during which Coor is being paid his $224,250 presidential base salary.

Creation of an Office for the President Emeritus at ASU's Downtown Center, with commitment to fund it for this fiscal year, which ends in June, at a cost not to exceed $63,000.

The indefinite extension of a supplemental pension plan enacted for Coor during his tenure as president. Under that plan, an amount equal to 18 percent of Coor's base salary is placed every year into a cash-balance defined pension plan, along with the regular retirement contributions Coor and the university paid into the plan like that of other employees.

The arrangement earned him roughly $40,000 a year in extra retirement cash at the height of his presidency. After next June, when he becomes a faculty member of the ASU School of Public Affairs at a salary of $150,000, the supplemental pension payment will amount to $27,000 a year, or more than a quarter-million dollars extra if he works for another 10 years. Coor's ability to assume the faculty position was a term of his original contract. The regents' decision to extend the supplemental pension to his teaching post is a first for a president stepping down at an Arizona university, although Joel Sideman, deputy executive director of the Board of Regents and the board's attorney, said board rules have been amended so that a similar arrangement may be offered to other retiring university presidents.

Lawmakers overseeing spending questioned Coor's package when told of its details.

'A real treasure'

House Appropriations Chairman Laura Knaperek, R-Tempe, who considers Coor "a real treasure," nonetheless questioned whether the regents went too far.

"It sounds to me that it might be a gift, it was an afterthought," Knaperek said. "Whenever something is given at the back end, it looks like a gift."

Rep. Russell Pearce, R-Mesa, who will assume Knaperek's committee chairmanship in January, was more blunt.

"To me, that's outrageous," Pearce said. Pearce said he was aware that Coor got "a huge retirement" but that most lawmakers were not familiar with the arrangement. He predicted that many would be "offended" because "some people work just as hard and don't get that."

The lawmakers agreed, however, that the decision was clearly within the discretion of the regents.

Regents called the package an appropriate gesture for a man credited with bolstering ASU's national prestige. Regents President Jack Jewett said it was "fair and reasonable," considering Coor's "enormous contributions."

"It wasn't a sweetheart deal," said Regent Kay McKay of Flagstaff, who headed the committee that negotiated the agreement. "It was a nice thing for us to do, but it was for his exemplary service to the state of Arizona."

Outgoing Superintendent of Public Instruction Jaime Molera, an ex-officio regent, said Coor deserved consideration "because of what he's done for the university . . . he's brought a lot of benefit to this state." Molera believes Coor "will generate a lot more for Arizona than what we're paying him."

Coor's compensation might not normally draw attention. However, every major university expenditure is likely to be under a microscope since regents began discussing plans to substantially increase tuition and reorganize the universities to combat what they say is chronic underfunding by the Legislature.

'Comfortable'

Coor, an esteemed administrator who came to ASU from Vermont, was unabashed in discussing his departure as president. He said he and the board were "comfortable" with the financial terms because they generally were in line with what top-tier research institutions offer key administrators.

The title of president emeritus is largely honorary, with the office designed to give Coor a landing pad as he makes the transition to a teaching role. Though there is no job description, Coor is expected to continue acting as a goodwill ambassador for the university.

Coor said his year's sabbatical had been "kind of understood" when he arrived at ASU, though it was not in his contract. Sideman said Coor had been unable to take the sabbatical previously because of his busy schedule.

Timing of sabbatical

But Coor also said sabbaticals commonly are taken by departing academic administrators at the end of their tenure because it allows "the transition back to a faculty role in the future."

McKay said the board agreed to tinker with Coor's retirement compensation because the benefits he expected to accrue when he signed on with ASU "didn't come." Coor had chosen a defined-contribution plan whose annual contributions were based on a percentage of his salary. When his salary didn't rise as expected, "he did not get what he'd anticipated for his retirement," McKay said.

"There hadn't been much of a (salary) progression over time," Coor agreed. He started in 1990 at an annual salary of $144,500, which at that time put it among the higher public-university presidential salaries in the country. But Coor also expected to gain paid posts on local boards of directors to supplement his income. Much of that additional income didn't materialize.

Coor this spring asked the regents to consider a new supplemental deferred compensation plan that would have paid him substantially more - an amount that Regents would not disclose, citing personnel rules - over the next 20 years.

Coor said it would have paid an annual amount into a deferred compensation fund based on his years of service and his most recent salary earnings. It would have entitled him to far more than what the regents had been paying and will continue to pay into his supplemental pension plan, though Coor did not offer an estimate of that amount.

McKay would only say that Coor's request was too expensive for the regents to accept.

"We were very prudent on his package in comparison to what it could have been," McKay said. "The board totally wanted to support him, but we put boundaries on it."

The Office for President Emeritus also was suggested by Coor to help him make the transition to the faculty while he sets up an independent think tank. Coor wanted the ASU Downtown Center office, including administrative and operational support totaling no more than $63,000 a year, to be funded for three years. The regents funded it for the next year, leaving subsequent decisions to ASU and new President Michael Crow.

Creates his 'do tank'

Coor expects to begin teaching next fall and said he recently chartered the Center for the Future of Arizona his "do tank" whose mission will be not simply to identify important issues facing the state, but to tackle them and push for solutions.

The center will be funded by private foundation grants, taking on "no more than two or three issues of significance to the state or to the Valley" and sticking with them for three to five years.

The Center for the Future of Arizona recently signed a lease for space at ASU's Downtown Center and is expected to assume many costs of Coor's downtown office, he said. Jewett said it was likely Coor would have just one office serving him as president emeritus, faculty member and head of a think tank.